The Sports Betting Alliance (SBA), a coalition including DraftKings, FanDuel, BetMGM, bet365, and Fanatics, filed a lawsuit in Cook County Circuit Court on December 30, 2025. The group challenged Chicago’s recent budget provisions, which would require separate municipal licenses for sports betting operators alongside the new 10.25% city tax on online wagers placed within city limits.
City officials promised to issue these new licenses by December 29, 2025. However, by the time the lawsuit was filed, none had been issued, placing online sportsbooks in a precarious position: operate without a local license or shut down their services in Chicago as of January 1.
SBA asserts that Chicago overstepped its authority. According to the lawsuit, only the state has jurisdiction over licensing and taxing online sports wagering. The Illinois Constitution reserves such functions for the state unless explicitly delegated—and the General Assembly has granted no such delegation to local governments.
The alliance also argues that the ordinance’s text does not support a standalone city license requirement. The motion describes Chicago’s move as “invalid” and calls it “an unconstitutional assertion of authority” that would “irreparably harm the SBA, its members, and the public interest”.
SBA warned that forcing operators to choose between unlicensed operation or shutdown could lead to wide-ranging consequences. Members stand to lose good standing in other regulated jurisdictions if found operating illegally in Chicago, risking their broader licenses.
Additionally, a shutdown could drive Chicago bettors to unregulated, illegal platforms lacking consumer protections—harming the legal, taxable market and depriving revenue from both the state and city.
SBA has requested a temporary restraining order (TRO) to prevent enforcement of the licensing requirement. Without it, the coalition’s members could be forced to cease online operations in the city as of January 1. The lawsuit is pressing for swift judicial intervention ahead of the enforcement deadline.
The coalition previously requested a delay from Mayor Brandon Johnson on December 18, citing the need for clarity and compliance. With no delay granted, they filed their legal challenge.
SBA’s lawsuit is part of a broader effort at the state level to block municipal sports wagering regulation. Legislation is now pending in Springfield, sponsored by state Rep. Daniel Didech and Sen. Patrick Joyce in HB4171, that would explicitly prohibit local jurisdictions from taxing or licensing sports betting.
Those bills, if passed during the Illinois General Assembly session beginning January 14, 2026, would codify the position that only the state holds authority in this domain.
